Rover probe bill has topped £10m

The Government probe into the collapse of Midlands motor giant MG Rover has now cost more than £10 million, it has been revealed.

The Longbridge car-maker collapsed in April 2005 with losses of £1.6 billion and around 6,000 people lost their jobs.

The Government immediately launched an inquiry into the industrial disaster, which is also looking into the role of the so-called Phoenix Four - the Midland businessmen headed by John Towers who bought the business for £10 from BMW and ran it until its collapse.

Last night it was disclosed that the costs of the Government-commissioned inquiry now stand at more than £10 million.

Enterprise Minister Stephen Timms said the costs, as at December 3, 2007, were £9,068,693 plus VAT of £1,661,501. Mr Timms added that, in addition, disbursements of £425,596 were also paid.In 2005 the Government called in fraud and insolvency specialists to act as inspectors in the official inquiry into the failure of the firm, which was bought by Nanjing Automobile Corporation UK (NAC UK). It acquired the assets of MG Rover in July 2005 for £53 million.

The investigation is being conducted by by Guy Newey QC, of Maitland Chambers and Gervase MacGregor, of BDO Stoy Hayward. Mr Timms disclosed the costs in a parliamentary written reply to Labour's Austin Mitchell (Great Grimsby). He added: "The inspection is continuing and I am unable to say when the report will be submitted. The Secretary of State will then consider publication."

The MG Rover collapse meant the end of large-scale car production by a British-owned company.

The Chinese are currently planning to restart manufacture of the MG TF roadster in time to have the cars in the showrooms this spring. They are using a small part of the original factory site at Longbridge but production has been delayed by a string of problems, including damage to windscreens being imported by container from China.

At the same time NAC has agreed to merge with bigger Chinese car-maker Shanghai Automotive Industries Corporation (SAIC). Both had been making versions of the MG 75 for the Chinese market and are expected to combine their efforts to sell their cars into Europe.

Just three years ago SAIC was seen as a possible saviour of MG Rover. John Towers and his other directors spent more than a year wooing the Chinese company in the hope of a multi-million pound bail-out. But MG Rover continued to make losses and the Phoenix Four struggled to keep it afloat, selling the Longbridge site in a series of deals to property developers St Modwen and selling intellectual property rights and designs for the Rover 75 and 25 to SAIC for £67 million. But, in April 2005, SAIC pulled out of the deal and MG Rover collapsed under the weight of its debts.

Two years on most former Rover workers have found new jobs but many had to settle for much lower pay.